1. Field of the Invention
The present invention generally relates to view and analysis of information on suppliers for corporate procurement and, more particularly, to a method for structuring and viewing supplier information and a visual user interface for facilitating the evaluation and selection of one or more suppliers among a set of potential suppliers.
2. Description of the Related Art
Procurement is an essential part of any business. It is reported that businesses spend 60% or more of revenue on external purchases of goods and services. For example, a company with revenue of $1B spends $570M for buying goods and services with non-production (indirect material) purchasing of $348M. It is also reported that the 250 largest publicly held companies in the U.S. spent about $1.4 trillion in goods and services in 1999. This amount is a 10% increase over the amount spent in 1998.
Because procurement is a significant portion of overall business cost, companies are increasingly interested in cutting procurement spending in an effort to increase profitability. Savings of 5 to 15% of a company's total procurement spending by using a “systematic approach to procurement” can translate into millions of dollars in savings for large companies.
Despite its significance, conventional practices of corporate procurement are not always as effective as they should be, and they depend heavily on human skills. Indeed, most procurement professionals are left on their own in finding, evaluation, engaging and retaining suppliers. This reality usually stems from the fact that companies do not provide their buyers with information about suppliers that can enlighten decisions about which suppliers to use for which business situations.
Recently, procurement practices using the Internet technology (often referred to as e-procurement) promised to reduce the time, effort and costs associated with requesting, approving, and ultimately, purchasing supplies.
However, this technology until now merely helps reduce paper processing, and does not appear to have added much value. This technology appears to have merely replaced the telephone or facsimile machine. It does not save much time, although it provides minor benefits such as viewing online product information and allowing placement and tracking of orders 24 hours per day, 7 days-a-week.
Further, this technology appears to have merely automated the purchase process without much decision support capability, and thus is suited merely for “spot-buying” of indirect materials and other non-critical commodities.
To truly revamp procurement strategies and cover the full spectrum of corporate purchases including the direct/planned group (e.g., key components and key materials), the indirect/planned group (e.g., mission-critical Maintenance Repair Operation (MRO) and capital equipment), the direct/unplanned group (e.g., commodity materials and spot purchases), and the indirect/unplanned group (e.g., office supplies and travel), a systematic approach to purchasing intelligence is required in the areas of strategic sourcing and supplier relationship management.
Strategic sourcing refers to the process that identifies opportunities, evaluates potential sources, negotiates contracts and continually manages supplier relationships to achieve corporate goals.
Supplier relationship management refers to the practices that are needed to establish strategic relationships with suppliers of products and services that are important to a company's profitability. A systematic approach to supplier relationship management spans all functional areas and requires an enterprise-wide approach to squeeze waste out of the supply chain, and to re-engineer the processes that link buyers and suppliers.
More specifically, the efforts for procurement efficiency such as strategic sourcing and supplier relationship management try to systematically find answers to the following business questions (in several categories) to cut overall procurement expenditure. Questions asked include the following examples such as:    Business questions on sourcing: Whom should I buy from? What should I buy from each supplier? How should I buy (e.g., contracts or “spot buying”)? Are there too many suppliers in a particular area (consolidation opportunity)? Are there opportunities to consolidate suppliers for greater efficiency or better prices? Are there too few suppliers for mission-critical goods and services? Do I need to diversify suppliers for a particular goods and services? How can I make procurement predictable and repeatable?    Business questions on purchasing: How much to buy? When do I need it? Where do I need it? How much/often are purchases made outside of a corporate agreement? How should I eliminate “maverick buying” (i.e., employees purchasing items outside company-wide agreements) by establishing contracts and prices, which all requisitions must reference? How should I negotiate better volume discount and delivery time? How should I consolidate spending to negotiate from a position of strength? To what extent are procurement policies enforced? Are there any duplicate purchases?    Business questions on suppliers: How should I rate and rank suppliers? How much have I spent for each supplier? Who are the top suppliers (in terms of dollar amount, strategic fit, or performance)? How well are suppliers performing with respect to their contract obligations? How should I measure supplier performance over multiple attributes? How much does a particular supplier depend on my company for business?    Business questions on product design: What parts should I reuse for design? What equipment or MRO items do I need? Who should I outsource to? How should I collaborate with my business partners (e.g., suppliers and customers)?
Thus, prior to the present invention, there has been no method or visual user interface for providing an accurate overview of the information space comprising potential suppliers, or a set of useful analysis capabilities on the information space to facilitate evaluating and selecting the potential suppliers in an effective manner to save business cost in buying materials, goods and services.